2024 (12) TMI 1369 - AT - Customs

Levy of penalty u/s 112(a), 112(b) and 114AA of Customs Act. 1962 - mis-declaration of goods and manipulation of import documents - reliability of statement of Proprietor of M/s Dhairya International (Importer) and other co-accused - HELD THAT - The proceeding only on the basis of statement of co-accused is not sufficient to hold the Appellant guilty of mis-declaration of goods and manipulated import documents in absence of any search and recovery of corroborative evidence from him or his place. The alleged statement of the co-accused cannot be relied upon to implicate a person on charges of mis-declaration of goods and manipulation of import documents. Therefore, it was incumbent on the Investigating Officer, to have searched and recorded statement of the Appellant and to further prosecute him in the matter on the basis of its finding. Therefore, the proceedings against Appellant on the basis of the statements of the co-accused is not sufficient to hold him guilty of disputed imported goods. It is a settled law that no person shall be implicated in a crime merely on the basis of an allegation levelled by a co-accused, without any corroborative evidence. The role of the appellant in the present matter was argued by the department was to arrange finance and to purchase disputed goods from China and export to India. Ld. Consultant has opposed this argument on the ground that no evidences provided by the revenue in this regards. There are force in argument of Ld. Consultant. It is also noticed that no physical act of the appellant in relation to the goods in question has been brought out to justify the penalty on the appellant under the above sections. Penalty u/s 112 of CA - HELD THAT - The entire case of the Revenue against the appellant is based upon the statements of the co noticees. It is well-established law that the statements of the co-noticees, unless corroborated in material particulars by independent evidence, do not constitute the legal evidence. There is nothing on record to establish by the revenue with documentary evidence that Appellant had abetted in the relation to disputed imported goods for purpose of imposition of penalty under Section 112(a) and/or 112(b) of the Customs Act, 1962. Imposition of penalty under Section 114AA of Customs Act, 1962 - HELD THAT - In the present disputed matter all the declaration related to import of goods is signed and filed by Shri Guarav Patel. In fact Appellant has not made any declaration to the Custom Authorities as required under the Customs Act, 1962. No document etc., which has been produced by the revenue which was signed by the Appellant. It is also found that in the present matter revenue in support of allegation that Appellant is guilty of providing manipulated import documents i.e invoice, packing list, phytosanitary certificate etc. from China by showing description of goods as Bamboo Sticks for making Agarbattie not produced any single documentary evidence. As the ingredients for invocation of provisions of Section 114AA are absent in the present case penalty under the said section is not justified. Conclusion - Penalties are set aside, emphasizing that reliance solely on co-accused statements without corroborative evidence is inadequate for establishing guilt. The impugned order is set aside to the extent it imposes penalties upon the present appellant - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the penalty imposed on the appellant under Section 112(a), 112(b), and 114AA of the Customs Act, 1962, is sustainable on facts and in law.
• Whether the appellant's involvement in the mis-declaration of goods and manipulation of import documents was sufficiently established by the evidence presented.
• Whether the statements of co-accused can be solely relied upon to implicate the appellant in the absence of corroborative evidence.
• Whether the appellant's conduct satisfied the requirements for imposing penalties under Sections 112 and 114AA of the Customs Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Sustainability of Penalty under Section 112(a) and 112(b) of the Customs Act

• Relevant legal framework and precedents: Section 112 of the Customs Act deals with penalties for improper importation of goods. It requires a nexus between the penalty and the confiscability of the goods under Section 111.
• Court's interpretation and reasoning: The court found that the appellant's role was derived solely from the statements of the co-accused, without any corroborative evidence. The court emphasized that a person cannot be penalized based on the allegations of a co-accused without independent evidence.
• Key evidence and findings: The court noted the absence of any search, recovery, or corroborative evidence from the appellant or his premises. The statements of co-accused were deemed insufficient to hold the appellant guilty.
• Application of law to facts: The court applied the principle that penalties under Section 112 require evidence of the appellant's involvement in acts rendering goods liable to confiscation. The lack of evidence against the appellant led to the conclusion that the penalty was not justified.
• Treatment of competing arguments: The appellant argued against the lack of evidence, while the respondent reiterated the findings of the adjudicating authority. The court sided with the appellant, highlighting the need for independent evidence.
• Conclusions: The penalty under Section 112(a) and 112(b) was not sustainable due to the absence of evidence linking the appellant to the alleged misconduct.

Issue 2: Imposition of Penalty under Section 114AA of the Customs Act

• Relevant legal framework and precedents: Section 114AA penalizes the use of false or incorrect documents in customs transactions. It requires intentional or knowing involvement in creating or using such documents.
• Court's interpretation and reasoning: The court found no evidence that the appellant made or used false documents. The declarations related to the import were signed by another individual, not the appellant.
• Key evidence and findings: The court noted the absence of any documents signed or used by the appellant. The revenue failed to produce evidence of the appellant's involvement in document manipulation.
• Application of law to facts: The court determined that the requirements for imposing a penalty under Section 114AA were not met, as there was no evidence of the appellant's involvement in false documentation.
• Treatment of competing arguments: The appellant argued against the imposition of penalties due to lack of evidence, while the respondent relied on the adjudicating authority's findings. The court favored the appellant's position.
• Conclusions: The penalty under Section 114AA was not justified due to the absence of evidence of the appellant's involvement in using false documents.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The alleged statement of the co-accused cannot be relied upon to implicate a person on charges of mis-declaration of goods and manipulation of import documents."
• Core principles established: The judgment reinforced that penalties under Sections 112 and 114AA require independent evidence of involvement in the alleged misconduct. Statements of co-accused alone are insufficient.
• Final determinations on each issue: The court set aside the penalties imposed on the appellant under Sections 112(a), 112(b), and 114AA, allowing the appeal with consequential relief as per law.

The judgment underscores the necessity for concrete evidence when imposing penalties under the Customs Act, emphasizing that reliance solely on co-accused statements without corroborative evidence is inadequate for establishing guilt.